This article, originally published in Builder, is part four of a four-part series about Amazon's effect on housing and rental markets in Seattle, and its potential impact on each of the proposed cities for its second U.S. headquarters. Read part one, part two, and part three here.
Seattle’s current troubles with affordability and supply of both housing and buildable land can’t be pinned on Amazon entirely, according to Todd Britsch, Metrostudy regional director for the Seattle market. He notes three other major contributing factors: the housing recovery, timing, and most significantly, the Puget Sound Regional Council’s Growth Management Act (GMA).
The GMA was enacted by the Washington state legislature in 1990 and requires governments in densely populated counties to develop and adopt comprehensive plans for future development. The intention of the GMA is to prevent urban sprawl (in its broadest interpretation), and its boundaries draw artificial lines that channel growth to designated urban areas in order to protect rural, agricultural, and conservation areas.
According to Britsch, the main issue Seattle has meeting larger demand for housing was the GMA, which essentially establishes a boundary line around every jurisdiction, and restricts the amount of buildable land for formal subdivisions. “Part of the reason Amazon is expanding in a new market is really [due to] a severe shortage of buildable land. It’s not necessarily Amazon’s fault, it’s the fact that we haven’t adjusted our urban growth boundary in years,” he says.
Mike Pattison, the Snohomish County manager of the Master Builders Association of King and Snohomish Counties, also contends that the affordability crisis in Seattle is more closely tied to shortages caused by the GMA’s restrictions than to Amazon’s success, and that other markets may be more capable of supporting the massive growth Amazon will bring with HQ2.
“Operating under the [GMA] umbrella, we have artificially constricted land supply to begin with. I don’t believe most of the jurisdictions being considered [for HQ2] will face the same challenge Seattle faces,” Pattison says. “The growth of Amazon has exacerbated the problem, but we were experiencing land supply shortages even before the Amazon growth explosion.”
There’s a yin and yang in Seattle it seems, with Amazon and the tech industry on one side, and the GMA on the other. Amazon has been a powerhouse for employment and has driven demand in the market—an obvious positive, if a market can handle an influx of an additional 60,000 homes over a five year period—but that’s not the case in Seattle. The shortage of buildable land due to regulation has made the low supply of homes, and the resulting price growth, crippling.
“We literally have no inventory. We have nothing for new construction, we have nothing for resale,” Britsch says. “Today, there’s only a two-week supply of resale housing in the market, and we’re still seeing double-digit price appreciation for resale construction, averaging 10% a year.”
It’s difficult to quantify how much of Seattle’s price appreciation stems from GMA restrictions and the overall recovery of the real estate market versus the unique economic stimulus of Amazon entering the market. The company made a huge impact in the region with the infusion of new jobs and resulting in-migration—roughly 6,300 people have moved to the Puget Sound area every month from 2012 to 2017—however, it’s clear that Seattle is no longer a viable market for Amazon employees who need housing, especially those with families.
“It's almost hard to say it, but there is no supply of what we would call traditionally affordable housing left,” Pattison says. “There is a significant social impact in that middle-income families are having to move farther and farther from their jobs because they can longer afford to live in neighborhoods that are gentrifying.”
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